Tri Pointe Homes, Inc.

Greetings. Welcome to TriPoint Homes' fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to David Lee, General Counsel. Thank you. You may begin.

Good morning and welcome to TriPoint Homes' earnings conference call. Earlier this morning, the company released its financial results for the fourth quarter of 2021. Documents detailing these results, including a slide deck, are available at www.tripointhomes.com through the Investors link and under the Events and Presentations tab. Before the call begins, I would like to remind everyone that certain statements made on this call, which are not historical facts, including statements concerning future financial and operating performance, are forward-looking statements that involve risks and uncertainties. A discussion of risks and uncertainties and other factors that could cause actual results to differ materially are detailed in the company's SEC filings. Except as required by law, the company undertakes no duty to update these forward-looking statements. Additionally, reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be accessed through TriPoint's website and in its SEC filings. Hosting the call today are Doug Bauer, the company's chief executive officer, Glenn Keeler, the company's chief financial officer, Tom Mitchell, the company's chief operating officer and president, and Linda Mamet, the company's chief marketing officer. With that, I will now turn the call over to Doug.

Thanks, David. Good morning, and thank you for joining us today as we go over our results for the fourth quarter and full year 2021. provide an update on current business conditions and give insight into the future of TriPoint Homes. 2021 was a record year for our company, capped off with earnings of $1.33 per share in the fourth quarter and $4.12 for the full year. Home sales revenue rose 15% year over year for the quarter on a similar increase in new home deliveries. And our home sales gross margin for the quarter was 24.4%, which was an increase of 120 basis points year over year. SG&A expenses as a percentage of home building revenue for the quarter improved 140 basis points to 8.5%, a record low for the company. For the full year, we delivered 6,188 homes, which exceeded the high end of the original guidance we gave at this time last year. We were able to achieve all of this despite persistent industry-wide supply chain challenges. We credit and thank our experienced and skillful teams who looked for creative solutions and took proactive approaches to new home starts, material sourcing, and construction to get homes completed for our customers. Our sales base for the fourth quarter came in at 4.3 homes per community per month, which is well above seasonal norms for that time of the year. Demand for new homes continue to outstrip supply in our markets during the quarter, a dynamic that has carried into 2022. Buyers continue to exhibit a strong sense of urgency to own a home, driven by strong demographics, a migration to lower cost markets, and an overall change in attitude towards home ownership brought about by the pandemic. Leading the way in this demand surge is the millennial cohort. This demographic represents 57% of our home buyers in backlog and is a sizable population that should fuel the new home market for years to come. Another important demographic segment for our industry are the baby boomers who have accumulated wealth and are now looking for new home alternatives. We have strategically positioned our company to address these demographics and believe we are primed for ongoing positive results. We made significant strides in our return metrics during the fourth quarter, culminating in a return on average equity of 20.3% for the full year 2021. We achieved this goal through several strategic initiatives. including our one-brand launch at the beginning of last year, the ongoing monetization of our long-dated California assets, increased profitability across our home building platform, improved scale in our early stage divisions, more efficient land management, and consistent share repurchases. Our one-brand launch in January of 2021 has had the impact we anticipated. giving our company a unified brand message across our home building platform, streamlining our marketing efforts, and lowering our overhead costs as a percentage of total revenue, which was reflected in our SG&A percentage of 9.6% for the full year 2021. With respect to our California long-dated assets, we have a number of positive developments to report. we continue to generate strong orders and profits from our existing communities, particularly in Los Angeles, San Diego County, and the Inland Empire, thanks to our favorable land bases and outstanding market position. We opened our 292-unit targeted planned community Altus at Skyline in Santa Clarita in the fourth quarter, as well as our 844-unit planned community Citro in Fallbrook. Both feature new home options at attainable prices for their respective buyer segments, and the initial response has been tremendous. In the Inland Empire, our planned community of Atwell, with its detached entry-level and first move-up product generated over 21 orders per month in the fourth quarter. These California communities demonstrate our key focus on developing a mix of entry-level and first move up product in core sub markets. Despite rising home prices, our median sales price of the single family homes in the fourth quarter in California was $599,000 compared to the state's median single family existing home price of approximately $797,000. In addition to our California divisions, we saw excellent growth in financial results from our home building operations around the country. with 60% of our fourth quarter deliveries generated outside of California. This strategic focus to diversify our company from a geographic perspective started several years ago and is providing greater opportunities for us to offer more entry level and first move up price points while producing more efficient returns. We are especially pleased with the progress we have made in our newer divisions in Sacramento, Austin, Dallas, and the Carolinas, which are making significant contributions to the bottom line with a substantial runway for growth. We made considerable investments in our operations in 2021 by enhancing our technology platforms, introducing more efficient and cost-effective floor plans, and refined our design studio process. These initiatives will directly result in improved efficiency and returns. Another focus has been our lot option agreements and land banking arrangements. Total lot counts stood at over 41,000 lots at year end, with 47% controlled at year end versus 37% a year prior. We believe this land approach lowers the risks that are inherent in the land and land development business while improving our returns over time. The final component of our return improvement strategy has been our share repurchase program. And we were once again active buyers of our stock in the fourth quarter, purchasing more than 2.7 million shares at an average price of $22.64. This brought our full year total to over 13 million shares repurchased at an average price of $21.13 for an aggregate dollar amount of $276 million. Yesterday, our board authorized an additional $250 million under our existing stock repurchase program as we remain committed to this program and view it as a productive use of our capital as well as a signal of confidence in TriPoint's future. 2021 was a record-breaking year for our company, and we believe we are poised to improve on those results in 2022 for a number of reasons. First, we started 2022 with a healthy backlog of over 3,100 homes. Our buyers and backlog, who have been pre-qualified through our mortgage affiliate, have an average debt-to-income ratio of 39% and an average FICO score of 748. With this deep backlog and the quality of our buyers, we are well positioned to deliver on our guidance, even with the uncertainty of rising interest rates. Second, demand has once again accelerated in 2022, building on already strong results we experienced in the fourth quarter. With the extremely low supply of housing in both the resale and new home markets, coupled with our strong buyer profile, we feel demand will remain healthy. We are currently managing sales at over 50% of our communities in an effort to account for rising costs, and to maximize profits while matching sales cadence to our production capacity. Third, we are extremely pleased with our land pipeline and expect to open between 180 and 200 new communities over the next 24 months. The majority of those communities are located in our growth areas outside of California and in the more affordable entry level and first move up segments. Finally, with an all-time low net debt to net capital ratio of 21.1%, our balance sheet strength and our ability to generate positive cash flow from operations gives us the necessary liquidity to continue to grow our business and repurchase stock for strong returns to our shareholders. With that, I'd like to turn it over to Glenn, who will provide more detail on our results this quarter and give an update on our forward-looking guidance. Glenn?